Sports Betting Legalized In Kentucky

Just before the Kentucky State Legislature was to adjourn Thursday evening, House Bill 551–legislation to legalize, regulate and tax sports betting in the Commonwealth of Kentucky that seemed a longshot as late as Thursday morning–passed the Kentucky State Senate by a vote of 25-12. Governor Andy Beshear was to sign the legislation, which required 23 votes in favor, into law Friday morning.

“After years of urging lawmakers to legalize sports betting, we finally did it!” Beshear tweeted Thursday evening. “Today's result shows that hard work pays off. Kentuckians will soon be able to place their bets here, and for the first time, we are going to keep those dollars to support our roads and bridges, schools and communities.”

According to a report in the Louisville Courier Journal, the Kentucky Speedway and the state's horse racing tracks could pay a fee to operate as sports betting facilities, with bets allowed on site as well as on licensed websites and phone apps. Wagers placed at tracks would have an excise tax of 9.75%and online wagers 14.25%.

Early Thursday, it appeared that HB 551 was going to be short of the 23 required votes, but according to the Courier Journal, the bill was placed on the orders of the day and was on the House floor half an hour later.

The Kentucky Equine Education Project (KEEP) issued a statement applauding the passage of the bill, which reads, in part:

“KEEP and Kentucky's horse industry have been actively involved for the past several years in advocating for sports wagering legislation that protects the role of Kentucky's signature industry in the landscape of wagering options and provides new revenue for the state.

HB 551 accomplishes this by allowing for sports wagering to be offered in-person at Kentucky's racetracks. Additionally, sports wagering will be governed by the Kentucky Horse Racing Commission, a testament to the trust that wagerers place in Kentucky's horse industry.

Overall, this bill will benefit Kentucky's horse industry and community by offering new revenue sources for the industry, as well as attracting new fans to the sport through the in-person experiences at Kentucky racetracks.”

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After “Spreading Like Rabbits,” The Plug Has Been Pulled On Gray Games In Kentucky

They first showed up in Kentucky in 2021. Called gray games, they looked and acted like a slot machines, but the companies that manufactured the machines made the spurious claim that they were legal because they were actually games of skill. Before long, the machines grew to be so popular that, by some estimates, there were more than 5,000 of them, taking up residence in bars, restaurants and convenience stores across the state.

“They spread like rabbits,” said Majority Floor Leader Senator Damon Thayer of the games that got their name because, when it comes to legality, they operate in a gray area. “Before you knew it they were everywhere. These were mom and pop small businesses who were basically running illegal casinos in the back rooms of their gas stations, convenience stores, bars and restaurants.”

“This was their business model,” Thayer continued. “They'd come into a state where the games were illegal but there might have been a loophole in the law of a gray area in the law that gave them enough impetus with local businesses to go in and install the machines.”

The American Gaming Association (AGA) estimated that there are 580,000 gray games machines nationwide, including 67,000 in Pennsylvania, another state where the racing industry is dependent upon revenues from legal slot machines at its racetracks. The AGA also estimated that gray machines generated $27 billion a year in revenue. In 2021, the games were banned in Virginia, another state where racing benefits from revenue generated by HHR machines.

To Thayer, a staunch supporter of horse racing, gray games were a problem that was about to get much worse as the number of the machines in the state continued to climb. Not only did he believe that the machines were illegal but he recognized the threat they posed to racing. Purses have exploded in Kentucky in recent years, in large part because of the success of Historical Horse Racing (HHR) machines. The gray games machines gave HHR players another outlet, a place to spend their gambling dollars that would be of no help to horse racing.

“On behalf of the 60,000 jobs and billions of economic activity our signature horse industry provides, I proudly vote aye,” Thayer said when casting his vote in favor of the ban.

During the 2022 fiscal year, a total of $4.5 billion was bet through HHR machines in Kentucky.

“We went through so much to get HHR legalized and the machines are very popular and have led to huge purse growth that we all predicted,” Thayer said.  “And along comes this illegal threat to pari-mutuel wagering on horse racing as well as charitable gaming and the lottery. The gray games machines were viewed as an existential threat to all forms of legalized gambling in Kentucky.”

The problem was solved on March 16 when Kentucky Governor Andy Beshear signed House Bill 594, which outlawed the machines.

“They're entirely unregulated,” Beshear said after signing the bill. “I don't believe that they were legal, yet they came into Kentucky and just set up and were taking dollars from Kentuckians and taking them out of State with zero regulation, zero taxation, zero system to help those that might develop any issues from using them for gambling.”

Despite having key politicians like Beshear and Thayer in favor of a ban, nothing came easily when it came to gray games. Just two weeks before Beshear signed the bill a plurality of lawmakers voted to table the bill. That group wanted to create a state gaming commission to regulate and tax the machines. And in 2022, the Kentucky House passed a bill to ban the machines, but it got sidetracked when the Senate amended the bill and the House would not agree to the changes. Thayer said that gray games were gaining such momentum that he feared that if they weren't banned when they were their proponents were going to find a way to make them, officially, legal.

“They wanted to go another year with the machines continuing to multiply,” Thayer said. “They knew that if they made it another year with no ban there wouldn't be much the state could do to get rid of them. There was a real sense of urgency to pass a bill.  The feeling was if there was another year of uncontrolled growth of these machines they'd be here for good. That's because the more businesses that installed the machines the more advocates they would have calling representatives and senators to convince them not to ban them.”

Gray games had their advocates, primarily from the businesses, many of whom were, as Thayer described them “mom and pop” operations, who said they could not stay in business if the revenue they received from the gray games disappeared. Thayer said the gray games operators and manufacturers had “an army of advocates” and spent heavily on lobbyists and campaign contributions.

“You had this big freewheeling group of gray game operators spending an incredible amount of money on lobbyists and campaign contributions” he said. “Of all things, they aligned with group of Southern Baptist legislators who voted against HHR who were arguing to keep the gray games going. They did so because they had people in their district who owned places where they had the gray games machines. It was a strange group of bedfellows, one of the weirder things I have ever seen.”

The bill banning gray games goes into effect July 1, at which time they will disappear from a state where the horse racing and breeding industries can usually count on support from the state's lawmakers.

“There were a lot of reasons to be against gray machines,” Thayer said. “Everyone who voted to ban the machines had different reasons for doing so. There certainly was a big group of legislators who thought it was an illegal form of gaming that was a big group that saw it as a threat to horse racing.”

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Jamie Eads Officially Named Executive Director of KHRC

Gov. Andy Beshear has appointed Jamie Eads–who served as interim executive director of the Kentucky Horse Racing Commission (KHRC) for the past six months–the executive director of the KHRC, effective Dec. 1.

After graduating from the University of Kentucky with dual degrees in marketing and management, Eads worked for both the National Thoroughbred Racing Association (NTRA) and the Breeders' Cup LLC. She has been with the KHRC since 2008, when she joined the organization as the director of the Division of Incentives and Development. She then moved into the deputy director position in 2016.

“Jamie has done a wonderful job in leading a talented team at the Kentucky Horse Racing Commission since July of 2022 when she was named interim director,” said Beshear. “Her 15-year tenure at KHRC has prepared her to lead Kentucky horse racing into the future.”

Eads has been responsible for the administration of several popular incentive programs that have boosted the racing industry in Kentucky. She oversaw $16 million in breeder incentive funds and $47 million in state purse development funds and harness racings' Kentucky Proud Series.

“I am honored to serve Gov. Beshear and the Commonwealth, along with the members of the Commission and everyone on the KHRC team as we work together to further cement Kentucky as the world leader of breeding and racing,” said Eads.

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Taking Stock: Dr. Settle’s Dream is a Winner

Was it divine intervention?

As the story goes, sometime in late 1923 or early 1924, a Kentucky pastor, Rev. Dr. Thomas Settle, convinced some state legislators in Frankfort not to end legalized gambling in Kentucky by repealing parimutuel wagering, much to the relief of the Kentucky Jockey Club and other concerned horsemen. Most ministers may have taken the opposite tack at the time, but not Dr. Settle, and this made him stand out. A well-travelled Englishman who'd found his way to a small congregation on Main St. and Bell Ct. in Lexington, Dr. Settle had loved horses from youth and worked at a track early in life, and he also had personal and practical experience with gambling (which he regretted). He argued that repealing the law that made wagering at the track legal would lead to the proliferation of unregulated and illegal gambling with bookmakers, which he considered a greater evil.

Apparently his Oscar-like performance swayed enough lawmakers to put the brakes on the Bennett Bill. Dr. Settle's delivery was compelling without being over the top, and it was characterized with such words as “voiced,” “spoken,” “tell it,” “preach,” and “narrate.” For his efforts, grateful horsemen in the state and from across the country who'd heard of his defense raised money to build him a new church in Lexington, and inscribed on a plaque within its tower walls is this poignant acknowledgement: “To the Glory of God This Church Is Given to Him by the Lovers of the Horse From All Over the Country As A Token of Appreciation of Their Father's Goodness to His Children – Man.” It's dated 1926.

Religion, politics, and money have long been historically intertwined in horse racing in Kentucky, and what's actually known nowadays as Historical Horse Racing (HHR), Kentucky's equivalent to the slots that has propped up racing and breeding in other states, is very much a part of the present landscape in a state that's the center of the breeding industry in the U.S. HHR games have fueled purse monies in Kentucky to such an extent that the recent Kentucky Downs meet, for example, featured $150,000 maiden races, $500,000 Listed races, and several $1 million Grade ll and Grade lll events. HHR, to understate it, has been a boon to Kentucky horsemen, but horsemen take nothing for granted now. They know winds can change path in a heartbeat, and they have organized groups like the Kentucky Equine Education Project (KEEP) to advocate for Kentucky's most famous industry. Several of the movers and shakers behind the scenes are the younger generation like Case Clay of Three Chimneys, the chairman of KEEP, and Price Bell of Mill Ridge, a board member.

Kentucky, let's face it, is a socially conservative state, and despite its starring role in the racing/breeding industry as the home of the Gl Kentucky Derby–the most famous race in the country–and of such outstanding stallions, among others, as Gainesway's Tapit, sire of the undefeated Flightline, widely considered the best horse in training on the planet at the moment; Spendthrift's Into Mischief, sire of Flightline's chief challenger, Life Is Good; and Three Chimneys's Gun Runner, who is represented so far by a jaw-dropping six Grade l winners from his first crop of 3-year-olds, including two Grade l winners and five overall stakes winners Saturday, there's still plenty of opposition to HHR from those who view it as nothing more than a game of chance that's a contributor to moral and societal decay.

This friction between anti-and pro-gambling forces in Kentucky has existed for more than a hundred years, and horsemen have walked a tightrope protecting their interests for just as long. They're just better organized now than during the time of Dr. Settle, but, ironically, a parimutuel issue was once again at the center of the most recent storm that could have had dire ramifications. In February of 2021, HHR, which has been around for a decade, had to be legally written into law as a parimutuel game by Kentucky legislators after the Kentucky Supreme Court said parts of it were not and were therefore potentially illegal. After heated debate, both the House and the Senate passed legislation that included HHR within the definition of parimutuel betting, and it was signed into law by Gov. Andy Beshear on Feb. 22, 2021.

But Case Clay said it “came down to the wire,” and the final score–the votes to pass in both chambers were comfortable enough on the surface–didn't represent the closeness of the game.

“The HHR vote underlined the relevance of KEEP,” said Clay. “Relationship building with legislators is an important function of KEEP, and it's something we work on to advocate for the industry.”

Headley Bell, managing partner at Mill Ridge and Price Bell's father, understands relationship building. Mill Ridge threw a party on the Thursday evening after the first four days of selling at Keeneland, and guests included members of the Lexington community outside racing circles, as well as those within it. Linda Gorton, the mayor of Lexington, and Steve Kay, the vice-mayor, were also present, as were representatives of Horse Country Inc., a group of farms and businesses that provides educational tours “dedicated to sharing the stories of Kentucky's Horse Country.” Mill Ridge, with its storied history, is one of many destinations.

Dr. Settle's Dream

Oscar Performance (Kitten's Joy) stands at Mill Ridge and occupies the same one-stall stallion barn that once housed the excellent sire Diesis (GB) years ago. Oscar got his 10th first-crop winner Friday when first-time starter Dr. Settle's Dream won a New York-bred maiden special on turf at Belmont-at-Aqueduct for Byron Nimocks's Circle N Thoroughbreds. The win was particularly satisfying for Headley Bell, not only as another winner for the farm's sire, but also because he'd bought the colt for new friend and client Nimocks at OBS June for $30,000 through his Nicoma agency. And how about this? Bell is a longtime member of the Good Shepherd Episcopal Church on Main St. and Bell Ct. that Dr. Settle built, and Bell said that Nimocks's family “is very involved with the church” as well, hence the name of the colt.

Dr. Settle's Dream was bred by Scott Pierce in New York. His first two dams, Voiced, by War Front, and Spoken, by Unbridled's Song, respectively, haven't yet produced any stakes horses, but his Storm Cat third dam Tell It has a stakes winner to her credit, and his fourth dam is Preach, a Grade I winner by Mr. Prospector and the dam of the highly influential stallion Pulpit. The fifth dam is the Honest Pleasure mare Narrate. Not only that, the colt's first seven dams were bred by the Hancocks of Claiborne (the dam was bred by Claiborne in partnership with Adele B. Dilschneider), and Dr. Settle's Dream's seventh dam is Monarchy, a full-sister to Round Table. Bell was no doubt attracted to this long and deep line of Hancock mares, and perhaps their names elicited a smile when he'd zeroed in on the colt.

The gregarious Price Bell is general manager at Mill Ridge and runs the farm's day-to-day operations. I ran into him outside the Mill Ridge consignment on the Sunday before the Keeneland sale began, and we had a conversation about Mill Ridge's past. He reminded me that it was Bull Hancock who'd purchased Sir Ivor for Raymond Guest at the 1966 Keeneland summer sale, paying $42,000 for the future English Derby winner and European champion that Alice Chandler (as Mrs. Reynolds W. Bell), Headley's mother, had bred. Hal Price Headley, Alice Chandler's father, was one of the founders of Keeneland, and Bull Hancock's father, A. B. Hancock Sr., was one of its first trustees.

One thing led to another as we were discussing history and the relationships between the two families, and Price said he had an interesting article for me to read. From his phone he sent it to me right there. It was copy from the Indianapolis Sunday Star from Jan. 16, 1927, and it was about Rev. Dr. Thomas Settle and the church that he built after defending parimutuel wagering in Frankfort. Later that week when I spoke with  Headley and Price Bell at the Mill Ridge party, they convinced me to visit Dr. Settle's church the next day–on Friday, the dark day of selling. This was one week before the horse named after Dr. Settle won in New York.

The Church

Dr. Settle's dream was to build a magnificent church in the English Gothic style, and he realized that dream through the largesse of horsemen, who'd originally offered the minister $50,000 to put toward a house and car after his performance in Frankfort. As the story goes, Dr. Settle demurred and instead asked for donations to build a church for his community, and industry members from Kentucky and across the country responded heartily. One report states that the Thoroughbred Horse Association–Hal Price Headley was the organization's first president–alone raised more than $180,000. A.B. Hancock, Sr. was a big contributor, as were Col. E.R. Bradley of Idle Hour, J.E. Widener of Elmendorf, H.P. Whitney, Max Hirsch, and Charles Berryman (manager of Elmendorf), among many others.

Dr. Settle's attention to detail is evident in the structure as it stands today. The stained glass windows, for instance, are intricate, ornate, and expensive, and the museum-grade wood carvings are from Oberammergau, Germany, which is noted for its highly skilled craftsmen. (The well-known Oberammergau Passion Play's star at the time was the potter Anton Lang, who played Christ in the 1922 production. Lang toured the U.S. in 1923–he was on the cover of Time magazine that year–and brought with him craftsmen from Oberammergau who exhibited their carvings. It's highly likely that Dr. Settle saw or read about this and commissioned expensive works for Good Shepherd subsequently.)

There's a cautionary aspect to the Dr. Settle story, too. In his quest to realize his dream, Dr. Settle spent more than he had, and by the time he left Good Shepherd in 1929, he left the church so heavily in debt that it took years for the congregation to get clear.

But his dream survives as a magnificent house of worship for newer generations of Lexingtonians, and that's what matters.

It matters, too, that horsemen played a role in realizing Dr. Settle's dream.

Sid Fernando is president and CEO of Werk Thoroughbred Consultants, Inc., originator of the Werk Nick Rating and eNicks.

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